Firstly, what is meant by your 'Credit Rating?'
Everybody who has taken out credit has a credit file, and their credit file is used to calculate their creditworthiness.
It does this by recording the most recent 6 years of a person's financial history.
This then gives lenders an opportunity to view the history of potential clients, enabling them to assess the risks that each person might pose in relation to possible repayment issues, helping the lender to decide who they should and, more importantly who they shouldn’t, lend to.
This ‘risk assessment’ is often referred to as an individual’s credit rating.
Any time you have any financial activity, such as taking out a loan or making a monthly payment, it is recorded on your credit file and that activity stays on your file for 6 years.
When you enter into an IVA, a note is put on your credit file to inform anyone who might be thinking of lending you money that you are in an IVA. The terms of your IVA will exclude you from obtaining credit and this note on your file helps to ensure this is the case.
It is due to this note being recorded on your credit file that makes sure an IVA will affect your credit rating for 6 years, beginning from the date your IVA commences.
Most IVA’s only last for 5 years, which means there is a possibility that your IVA will finish a year before your credit file and your credit rating begin to repair themselves.
There is no harm in trying to obtain credit in the year after your IVA has completed, but it is likely that your credit rating will still be damaged by the presence of the IVA notation.
If this is the case, then it will be a matter of having to wait for the final year to pass before your ability to obtain credit return's to normal.
Your creditors cannot mark the credit file of your partner as a result of your financial activities.
So it is safe to say that your partner will not lose their credit worthiness as a result of you entering into an IVA.
The exception to this would be if you shared a financial association with them.
A financial association would typically be a bank account or credit agreement where both names are listed on the documentation.
Creditors will assess the risks of all named persons on the agreement as equal, by risk assessing each person to the level of the worst credit rating on the agreement.
To avoid a financial associations like this happening to you, you should ensure that all your joint accounts are closed and your name is removed from any other shared financial agreements, before the commencement of your IVA.
An individual's address is no longer allowed to be associated with their financial status, thus removing the possibility of people being associated financially in this way.
This means that an IVA will not damage the credit rating of the people you live with.
However, it is still prudent to make sure there are no other financial links between you and the people you live with, which might create a financial association.
So, make sure you severe all financial ties with other people at your address if they are not already directly involved with your financial circumstances.
Do not be tempted to open a joint bank account with your co-sharers to make paying the household bills easier, even if there are no credit facilities attached to it, for this type of financial association will have an impact on all the people named on the account.
However, being named alongside your co-sharers on the tenancy agreement, or named on a utility bill, should not create a problem.